During NEO the new employee or intern is introduced to
company policies, systems and benefits. Breakfast and lunch are provided. New employees need to bring proof of employment eligibility if they have not yet provided such to their recruiter, as well as I-9 information. Interns and other employees taking advantage of Microsoft-subsidized housing will need their housing checklist and agreement. Of course, some would argue that Microsoft indirectly subsidizes almost all the housing in Seattle.

After NEO employees are free to spend the rest of the day as they wish, and need not report to their manager or mentor until the next morning.

I have no idea if Microsoft used this acronym before the release of The Matrix.